Understanding Credit Scores: Why It Matters & How to Improve It

Something earlier was just a financial number, but now that plays a vital role in being your digital identity. Yes! That’s credit score! Whether you’re opting to apply for a loan or to sign up for a credit card, or to open a Demat account to start investing, your credit score plays a vital role in determining your financial credibility.

Many Indians still overlook the power of credit scores until they’re denied a loan or face high interest rates. Let’s break it down simply: how it works, how to check credit score free, and how to use this knowledge to unlock better financial opportunities—including investing in your future.

WHAT IS A CREDIT SCORE AND WHAT DOES IT MEAN?

A credit score is a three-digit number, which falls usually between 300 and 900, which shows the probability you are in to repay borrowed money. It is calculated by credit bureaus such as CIBIL, Experian, Equifax, and CRIF High Mark.

As far as your score is higher, you can gain the most trust from your lenders. It’s not just about loans, the score also influences insurance premiums, rental approvals, and even job screenings as well in some industries.

UNDERSTANDING THE CREDIT SCORE RANGE

The credit score slab is as follows:

CREDIT SCORE RANGE MEANING

750 – 900 Which means you will be easily approved for loans/cards

700 – 749 Which will get a Decent approval chances

650 – 699 Approval will be possible but with certain conditions

600 – 649 Less chances for approval or high interest

Below 600 High rejection risk

Most of the banks and NBFCs prefer their customers to be with a score above 750 for benefitable offers.

HOW TO CHECK CREDIT SCORE FREE IN INDIA

Checking your score doesn’t impact it – and the best part? Check your score here:

• CIBIL – https://www.cibil.com

These sites allow credit score check online with basic PAN and mobile OTP. It takes under 5 minutes.

feel free to Read our Blog on Credit Score Secrets Loan Agents Hide | Improve Your Credit Profile Now

WHAT AFFECTS MY CREDIT SCORE?

Many don’t realize how easily day-to-day actions can affect your score. Here are the main factors:

• If may you miss to pay an EMI or credit card payments - this will gradually lessen your credit score.

• Utilizing over 30% of your credit limit is much riskier and this case also lowers your credit score.

• Older credit history gives them trust. So avoid closing old cards unnecessarily.

HOW TO IMPROVE YOUR CREDIT SCORE FAST

If your score is below 700, don’t panic—there are practical steps to boost it:

1. Pay Your Bills on Time – Set reminders or auto-pay for EMIs and credit cards.

2. Limit Credit Usage - Keep your monthly credit card spend under 30–40% of the total limit

3. Avoid Multiple Loans Together – Spread out applications. If you have many loans may lower your credit score.

4. Increase Credit Limit Smartly – If eligible, request a limit increase; but don’t spend more

5. Diversify Credit Types – A combination of education loans, car loans, and credit cards pluses your balance.

6. Check Credit Reports Regularly – Spot errors or fraud early and raise a dispute with the bureau.

COMMON CREDIT SCORE MISTAKES TO AVOID

Even financially savvy people fall into these traps:

• Only paying minimum due on credit cards

This racks up interest and hurts your score.

• Closing old credit cards

Older cards boost your credit age. Keep them open if they’re not costly.

• Ignoring small loans

Even a ₹5,000 personal loan default affects your score.

• Not monitoring co-signed or joint loans

If your friend defaults, your credit also suffers.

CREDIT SCORE SERVICES IN INDIA

Other that the sites mentioned above, you can also use:

• Credit monitoring apps – like OneScore, CreditMantri, PaisaBazaar

• Banking apps – They even provide your credit score tracker inbuilt in their mobile apps

• NBFCs & brokers – Some offer bundled credit checks during Demat/KYC onboarding

WHY INVESTORS SHOULD CARE ABOUT THEIR CREDIT SCORE

You might think: “Why should an investor care about their credit score if he/she just wanted to invest?”

Here’s why:

• Margin trading, IPO applications, and broker loan products often consider creditworthiness.

• Building a solid score allows access to many pre-approved offers, which enables faster capital deployment for all your investments.

• Financial discipline for credit also translates to better trading decisions.

So, managing your credit is not out of syllabus – it always lies as a part of your investment journey.

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CONCLUSION

Your credit score is not only about loans; it’s an eye-opener to all your financial goals. When you come to know what is your credit score, what impacts it, you may opt clearing some small mistakes! Build your foundation for a successful financial future

And when you're ready to turn your improved credit health into real wealth-building? GoPocket is just a click away.

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